8 Tips for Avoiding Debt in the UAE

Getting a loan is quite common for most OFWs, even before they start working abroad. They usually borrow money for processing passports, visas, medical tests, and other fees. Of course, the plan is to start paying back loans as soon as they begin earning money overseas.

Once they arrive in the UAE, however, some OFWs are attracted to the low interest rates of credit cards. Eager to pay back their loans as soon as possible, they sign up for a credit card, unaware of hidden charges. As a result, they wind up getting even deeper in debt!

Many OFWs get into serious trouble because of debt.

How to Avoid Falling into Debt in the UAE

In the UAE, falling into debt could land you in serious trouble. You could get detained for failing to settle credit card payments. Likewise, if you issue a bounced check, it is considered as a criminal offense. Hence, these and other debt-related situations could lead to imprisonment!

In order to avoid falling into debt, here are some tips that every OFW should consider:

Tip #1 – Plan your budget and stick with it.
How much money do you make? How much do you need for food, rent, and other expenses? All of these information should go into your budget. Begin by making a list of all your transactions for a month, set targets for each category, and more importantly — stick to your budget!

Tip #2 – Distinguish between “needs” and “wants.”
How many times have you bought something that you haven’t used at all? While there is nothing wrong with buying what you “want” once in a while, remember that it is not as urgent or important as your “needs.” Moreover, don’t lose sight of your financial goals and priorities!

Plan your budget and stick with it!

Tip #3 – Compare products and prices before buying.
Keep in mind that a single product may cost differently among stores. There may also be different brands carrying the same line of products. Without compromising quality, which product (and store) falls within your budget? Before you buy, don’t forget to compare first!

Tip #4 – Pay with cash as much as possible.
Paying with credit cards may be easy and convenient, but it is also more tempting. On the other hand, paying with cash enables you to control your spending. We may be living in a “paperless” society these days, but paying with “tangible” money can help prevent overspending.

Tip #5 – Avoid “get-rich-quick” scams and offers.
If an offer sounds too good to be true, then most likely — it’s not true! Stay alert for offers and schemes that promise high returns in just a short period of time. Learn to recognize “pyramid” and “networking” scams as well. Remember that a good investment takes time and effort!

Compare products and prices before buying.

Tip #6 – Live within your means.
Living within our means is a basic principle that most people forget. Simply put, don’t spend more than you can earn! If you really need to buy something that is beyond your budget, then save for it! Also, look for ways to increase your income, so that you wouldn’t have to get a loan.

Tip #7 – Open a savings account.
Setting aside part of your money into a savings account is a wise idea. This could serve as your emergency fund when unexpected situations arise. It also helps to open a passbook account, which makes it “harder” for you to withdraw money, so you can focus on saving instead.

Tip #8 – Learn about good financial management.
Being financially literate is essential these days; otherwise, you may end up misusing your hard-earned money. Consider joining a financial literacy or management seminar. Read books about saving and investing money. Never underestimate the value of knowledge and education!

Opening a savings account is always a wise idea.

By following these tips, you can avoid unnecessary spending and falling into debt. Keep in mind that having good financial skills is one of the keys to becoming a successful OFW. Likewise, learning about investment opportunities for OFWs can also be rewarding in the long run.